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Government regulations stifle manufacturing, MAPI reports

It seems that not a lot has changed with respect to the government's drive to improve the jobs outlook and promote manufacturing. But you know what they say - what the government giveth with one hand, it taketh away with the other. Last week, the President was in Raleigh, NC, promoting his "Manufacturing Hubs" as a next effort to improve the manufacturing economy. That came on the heels of the latest jobs report that in December, a mere 74,000 jobs were added. The Manufacturing Hub in North Carolina is a public-private effort to develop next-generation power electronics.

It would all be great except that for every effort the federal government makes to create jobs and promote manufacturing, it does something in the regulatory arena to put obstacles in the way of that effort. For example, a study released last fall by the Manufacturers Alliance for Productivity and Innovation (MAPI) in conjunction with NERA Economic Consulting to measure how federal rules affect the manufacturing sector, concluded that manufacturers are being hurt by the enormous number of government regulations.

"Reviewing federal records going back three decades, NERA counted the regulations specifically targeting manufacturers, categorized them by agency, and measured their impact in the aggregate and by industry," said Stephen Gold, president and CEO of MAPI. "While manufacturers know instinctively that they regulatory burden is growing, our findings make it clear that the regulatory system is at best unbridled and at worst dysfunctional."

Gold went on to list 10 facts that policymakers should know about the impact of regulations on the American factory sector. Let's look at just a few of them, and you can read the rest of them for yourself (www.mapi.net/10-facts-know-about-regulations-and-manufacturing).

Fact 1: Since 1991, the federal government has promulgated more than 2,300 regulations specifically targeting manufacturers - some broad and expansive and others narrowly focused on a specific subsector. "That comes out to an average of just under 1.5 manufacturing-related rules issued each week by federal agencies for more than three decades," writes Gold. "No wonder manufacturers see the current regulatory regime as death by a thousand cuts."

Fact 2: Since 1998, we've had a 44% increase in the number of regulations affecting manufacturing, but because of two severe recessions, manufacturing output increased only 12% over that time. "There is obviously no political or managerial discipline in the system," says Gold. "For a country that can't jumpstart its economy and can't create jobs, this is like shooting ourselves in the foot."

Fact 3: During that same 15-year period, while the number of manufacturing-specific regulations was increasing by 44%, manufacturing employment dropped from 17 million to 12 million. "While many factors were involved in this massive loss of jobs, the relentless climb in the regulatory burden must be viewed as a major contributing factor," Gold says.

Well, you can read the rest online - and weep.

On the front-end, where all the posturing and speech-making takes place in the spotlight of the media and in front of big audiences waiting with baited breath for the promises of a great manufacturing renaissance, while on the back-end, government agencies are creating more regulatory hurdles that do nothing but harm manufacturing's efforts at revival.

Gold notes that "highlighting the growing regulatory burden on American manufacturers does not equate to calling for the eliminating of regulation, (health and safety rules play a critical role in the success of a manufacturing economy), manufacturers simply need a more cost-effective, coordinated system through which federal agencies issue rules targeting their operations."

In other words, government needs to understand how every rule they make impacts manufacturers, and consider the law of unintended consequences. Then they need to find the middle way between making laws that become onerous to manufacturing with little long-term benefit, and those that are truly beneficial.

TAGS: Business
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